RECOMMENDED INCREASED ACQUISITION of Pharos Energy plc (LON:PHAR) by Ratio Petroleum Energy LP to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006
TERMINATION OF SERICA OFFER
UPDATE REGARDING SHAREHOLDER MEETINGS TO APPROVE INCREASED RATIO OFFER
1. Introduction
On 24 June 2026, the board of directors of each of Ratio and Pharos announced that they had reached agreement on the terms of a recommended acquisition by Ratio of the entire issued and to be issued share capital of Pharos. Under the terms of the Original Acquisition, Pharos Shareholders were entitled to receive a total value of up to 28.0 pence in cash per Pharos Share, comprising 23.0683 pence in cash per Pharos Share together with 4.0 pence in cash per Pharos Share by way of a special dividend and the FY25 Final Dividend (as defined below).
The scheme document in respect of the Acquisition was published and made available to Pharos Shareholders on 21 July 2026. This announcement should be read in conjunction with the Scheme Document.
Following the announcement of a competing offer for Pharos by Serica Energy plc on 26 July 2026, the board of directors of each of Ratio and Pharos announced on 7 August 2026 that they have agreed the terms of an increased recommended all-cash offer by Ratio for the entire issued and to be issued share capital of Pharos to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006.
Under the terms of the Acquisition, as revised by the Increased Ratio Offer, Pharos Shareholders will be entitled to receive:
• 28.8183 pence in cash per Pharos Share; plus
• 4.0 pence in cash per Pharos Share by way of special dividend to be paid from Pharos’ existing cash resources that the Pharos Board intends to declare prior to completion of the Acquisition with the record and payment dates aligned with the corresponding dates for determining entitlements to, and payment of, the Cash Consideration due to Pharos Shareholders under the terms of the Acquisition,
which would result in a total value of 32.8183 pence per Pharos Share. Pharos Shareholders, where they qualified, will continue to be entitled to retain the final dividend of 0.9317 pence in cash per Pharos Share for the financial year ended 31 December 2025 which was declared on 25 March 2026 and paid on 17 July 2026 to qualifying Pharos Shareholders on the register at close of business on 12 June 2026.
Accordingly, taking together the total value offered of 32.8183 pence per Pharos Share with the FY25 Final Dividend, the aggregate amount Pharos Shareholders will receive pursuant to the Acquisition, as revised by the Increased Ratio Offer, is 33.75 pence per Pharos Share.
Subsequently, Serica announced on 10 August 2026 that the financial terms of the Serica Offer are final and will not be increased or improved.
2. Termination of Serica Offer
As noted in the Increased Ratio Offer Announcement, the Pharos Directors have withdrawn their recommendation of the Serica Offer and have determined not to proceed with the scheme of arrangement to implement the Serica Offer or to convene any Pharos Shareholder meeting for the purposes of considering the Serica Offer. In addition, Serica has formally notified the Pharos Directors that it does not intend to implement the Serica Offer as a Takeover Offer as defined in Chapter 3 of Part 28 of the Companies Act.
Accordingly, and on the basis that the financial terms of the Serica Offer are final and will not be increased or improved, the Pharos board has provided its consent to the Panel on Takeovers and Mergers (the “Panel“) to release Serica from its obligation under Rule 2.7(b) and Rule 24.1 of the City Code on Takeovers and Mergers (the “Code“) to proceed with the Serica Offer and Serica has confirmed that it will not proceed with the Serica Offer.
As a result, the Panel has confirmed to Pharos and Serica that:
• Serica is released from its obligation under Rule 2.7(b) and Rule 24.1 of the Code to proceed with the Serica Offer; and
• Serica is subject to the restrictions set out in Rule 35.1 of the Code and is prohibited from, amongst other things, making any offer for Pharos without the consent of the Panel for a period of 12 months.
Capitalised terms used and not defined in this announcement have the meanings given to them in the Scheme Document.
This announcement has been made with the consent of Serica.
3. Irrevocable Undertakings
As noted in the Increased Ratio Offer Announcement, Ratio has received irrevocable undertakings from each of the Pharos Directors who hold Pharos Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), in respect of a total of 2,380,289 Pharos Shares, representing approximately 0.57 per cent. of the existing issued ordinary share capital of Pharos on the business day prior to the release of the Increased Ratio Offer Announcement (the “Latest Practicable Date“).
Ratio has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) from Pharos Shareholders in respect of a total of 171,470,348 Pharos Shares representing, in aggregate, approximately 41.19 per cent. of Pharos’ existing issued ordinary share capital on the Latest Practicable Date. As a result of the Increased Ratio Offer, all of these irrevocable undertakings will now continue to be binding in accordance with their terms and are no longer capable of lapsing under paragraph 7.1.4. or 7.1.5 of the relevant undertakings (as applicable) in the event of a higher competing offer from any third party.
Ratio has therefore received irrevocable undertakings in respect of a total of 173,850,637 Pharos Shares representing, in aggregate, approximately 41.76 per cent. of Pharos’ existing issued ordinary share capital in issue on the Latest Practicable Date.
4. Update regarding Shareholder Meetings in relation to the Increased Ratio Offer
As noted in the Increased Ratio Offer Announcement, the Pharos Board intends to adjourn the Court Meeting and General Meeting (together, the “Shareholder Meetings”) which have been convened for 17 August 2026 to provide Pharos Shareholders with more time to make informed voting decisions.
It is intended that the Court Meeting and General Meeting to consider the Acquisition, the notices of which are set out at Parts 9 and 10 of the Scheme Document, will be adjourned to:
· Court Meeting: 28 August 2026 at 11:00 a.m.
· General Meeting: 28 August 2026 at 11:15 a.m.
The Court Meeting and the General Meeting are to be held at the offices of Ashurst Perkins Coie UK LLP, London Fruit & Wool Exchange, 1 Duval Square, London E1 6PW. Pharos will make a further announcement in due course once the Meetings have been formally adjourned to the date and times noted above.
5. Action required
As further described in the Scheme Document, before the Court is asked to sanction the Scheme and in order for the Scheme to become Effective, the Scheme will require: (i) the approval of a majority in number representing 75 per cent. or more in value of votes cast by Scheme Shareholders present and voting either in person or by proxy at the Court Meeting (or any adjournment thereof), which has been convened by an order of the Court; and (ii) the passing of the Resolution by the requisite majority of Pharos Shareholders at the General Meeting (or any adjournment thereof). The Scheme is also subject to the satisfaction or (where applicable) waiver of the Conditions and further terms that are set out in the Scheme Document, including the Regulatory Conditions in Egypt and Vietnam.
It is important that, for the Court Meeting in particular, as many votes as possible are cast (whether in person or by proxy) in order for the Court to be satisfied that there is a fair and reasonable representation of Scheme Shareholders’ opinion. Scheme Shareholders and Pharos Shareholders are therefore strongly urged to complete, sign and return their Forms of Proxy or to appoint a proxy electronically either through the relevant share portal service, Proxymity or through CREST as soon as possible and, in any event, by no later than 11:00 a.m. on 26 August 2026 in respect of the Court Meeting and 11:15 a.m. on 26 August 2026 in respect of the General Meeting in accordance with the instructions set out in the Scheme Document and the Forms of Proxy. Instructions in relation to voting and the completion of the Forms of Proxy are included in the Scheme Document. Scheme Shareholders and Pharos Shareholders are also strongly encouraged to appoint the Chair of the meeting as their proxy.
6. Expected timetable of principal events
An updated expected timetable of principal events for the Scheme is set out in the appendix to this announcement. Pharos will make further announcements as appropriate with such announcements being available on Pharos’ website at https://www.pharos.energy/investors/offer-by-ratio-petroleum/ and on Ratio’s website at https://ratiopetroleum.com/offer-disclaimer/.
The updated expected timetable includes a revised Long Stop Date such that the Acquisition will be conditional upon the Scheme becoming unconditional and becoming Effective, subject to the provisions of the Code, by no later than 11.59 p.m. on 15 July 2027, or such later date: (i) as may be agreed in writing by Ratio and Pharos (with the Panel’s consent, if required); or (ii) (in a competitive situation) as may be specified by Ratio with the consent of the Panel; or (iii) as the Panel may direct under the Note on Section 3 of Appendix 7 of the Code, and, in each case, as the Court may approve (if such approval is required).
7. Pharos Directors’ recommendation of the Increased Ratio Offer
The Pharos Directors, who have been so advised by Rothschild & Co as to the financial terms of the Increased Ratio Offer, consider the terms of the Increased Ratio Offer to be fair and reasonable. In providing its advice to the Pharos Directors, Rothschild & Co has taken into account the commercial assessments of the Pharos Directors. Rothschild & Co is providing independent financial advice to the Pharos Directors for the purposes of Rule 3 of the Code.
Accordingly, the Pharos Directors unanimously recommend that Pharos Shareholders vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting as the Pharos Directors who hold Pharos Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 2,380,289 Pharos Shares representing, in aggregate, approximately 0.57 per cent. of the ordinary share capital of Pharos.
8. Helpline
If you have any questions about the Scheme Document, the Court Meeting or the General Meeting, or are in any doubt as to how to complete and return the Forms of Proxy, please contact Pharos’ registrar, Equiniti, by writing to them at Highdown House, Yeoman Way, Worthing, West Sussex, United Kingdom, BN99 6DA or by calling them on +44 (0)371 384 2050 during business hours (lines are open from 8.30 a.m. to 5.30 p.m., Monday to Friday (excluding public holidays in England and Wales)). Calls are charged at the standard geographical rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Please note that Equiniti cannot provide any financial, legal or tax advice. Calls may be recorded and monitored for security and training purposes.
